Global Home Prices Are On the Rise – Here’s A Country By Country Ranking

Global home prices are on the rise, and numbers from the International Monetary Fund (IMF), the monetary policy arm of the UN, show that Canada ranks amongst the top ten of all of their housing indicators. While that sounds like a good thing, the IMF generally warns that too much growth means overvaluation. Overvaluation requires a correction, and if it goes too high, even a crash.

Global Real Home Prices

Most countries tracked by the IMF saw real home prices growth. This measure looks at how prices changed over the past 5 years. The top 5 countries for real price growth were

Iceland (12.51%)

New Zealand (12.23%)

Hungary (10.65%)

Latvia (10.51%), and

Canada (10.49%)

15. UK (6.38%); 23. US (4.78%); Australia (2.12%)

The median growth for all countries was 2.86% . The top five countries grew at least 3 times that rate.

House Price-to-Income Ratio

Home prices grew faster than income in 15 of the 32 countries tracked by the IMF. This is a basic affordability measure for housing, and takes the median house price and compares it to the median disposable income over the life of a typical mortgage. The highest numbers were as follows:

New Zealand (137.02%)

Austria (126.43%)

Germany (124.58%)

Sweden (123.54%)

Luxembourg (121.02%)

Switzerland (120.12)

Canada (118.75%)

Estonia (118.34%)

Norway (116.84%)

Australia (116.79%)

UK (112.14%)

Belgium (106.84%)

US (105.15%)

The higher the ratio, the less likely the country is able to maintain home prices without a severe correction.

House Price-to-Rent Ratio

This is the primary measure the IMF uses to determine if a market is “overvalued.” They use the ratio of home prices to the cost of renting, then measure the deviation from the normal. Generally speaking, it’s a smarter idea to rent in these countries if all you can afford is the median house price (or less).

Turkey (149.70%)

New Zealand (139.75%)

Israel (132.94%)

Canada (132.94%)

Sweden (131.97%)

Germany (129.48%)

Norway (125.19%)

Luxembourg (122.88%)

Mexico (121.61%)

Switzerland (113.48%)

Austria (112.14%)

Iceland (111.31%)

Australia (110.71%)

Japan (109.68%)

Slovak Rep. (109.25%)

UK (109.24%)

US (108.61%)

Home price growth is generally a good thing, but too much of a good thing usually has consequences. The further away these prices get from healthy, sustainable growth, the worse it will be for the market. Best case scenario, years of stagnation while wages catch up with prices – not unlike what happened in the US. Worst case scenario…well, let’s not use the C-word. Uh…not that one, the housing c-word.

The comments above are edited ([ ]) and abridged (…) excerpts from the original articleby Kaitlin Last

The United States is starting to see a surge in foreign buying according to the National Association of Realtors (NAR). These numbers are showing explosive growth in both the transactions, and dollar volume.

If you’re from Canada and the U.S., chances are you’ll never see market capitulation. However, you’ll likely see many corrections, and maybe even a couple of crashes. Here are the definitions of the meanings of the words: correction. crash and capitulation.

In the past few decades, the concept of home ownership has been completely turned on its head. Previously, homes were considered a very long-term consumption good…[No one] ever considered tripling the value of their homes by retirement time and selling them to move beachside yet, somehow along the way, this became a reasonable investment expectation. Even today, home buyers still make their purchases with the hopes of escalating prices. [It begs answers to these questions: Is a house just a home? Should a house be expected to behave like an investment? Is the housing game nothing more than a Ponzi scheme where the end buyer before the market corrects becomes the “greater fool”? Let’s try and answer those questions.] Words: 935

There are over 552,000 multi-millionaires, and 87% of them own a second home. The wealth analysts at New World Wealth (NWW) have compiled their annual report on second home buying by multi-millionaires, those with over US$10 million in assets. Old money cites (NY, Hong Kong, etc…) top the list for the most secondary homes held by this segment of buyers, but some interesting new cities are experiencing rapid growth.

The number of homes with negative equity in the U.S. is still high, but the numbers are improving. At the end of the first quarter in 2017, 3.1 million homes owed more on their mortgage than the home was worth. This number improved from the previous quarter, with 91,000 homes regaining equity. The total number of mortgages underwater in the U.S. still stands at 6.1%.

Now that Canada has been flagged for a recession next year, it’ll be interesting to see how Canadians respond. Will they abstain from further binging, or are they too busy shopping for new homes to hear the warnings.

The world will soon realise that all the assets that have been inflated to bubble levels will lose most of their value. Indeed, if we look at what could happen to house prices in real money (gold), the risk is such that buying a house today is likely to be a very costly and perhaps ruining experience.

Over long periods the inflation-adjusted price of homes in the U.S. has tended to increase by a little more than 1% per year. That doesn’t mean owning a home is a good way to make a 1% real return on your money though. This article explains why.

In a long-term strategy which employs both investments, there is a case for putting an over-weight on housing, and an under-weight on gold, given current relative price levels unless one is specifically investing for financial crisis.

Thanks for reading! If you want more articles like the one abovevisit our Facebook page (here) and “Like” any article so you can get future articles automatically delivered to your feed. You can also “Follow the munKNEE” on Twitterorregister to receive ourFREEtri-weekly newsletter (see sample here , sign up in top right hand corner).

Remember: munKNEE should be in everybody’s inbox and MONEY in everybody’s wallet!

DISCLOSURE: It is our intent that all posts on this site be in accordance with the requirements, restrictions and terms of the Copyright Law of the United States and all other copyright treaties to which the United States is party and more specifically of the Digital Millennium Copyright Act - Blogger . As such, all posts on this website have been screened at Library of Congress Catalog as to their eligibility for posting. Should any post be deemed to be inadvertently in contravention of these Acts' terms please advise with substantiation of such apparent contravention (i.e. registration number) and the article in question will be immediately deleted from the site. Also, visit U.S. Code 17-107 Limitations on Exclusive Rights - Fair Use

FAIR USE NOTICE: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of financial, economic and investment issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

COPYRIGHT & DISCLAIMER: Lorimer Wilson is not a registered advisor and does not give investment advice per se. The articles to be found on the site are expressions of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. Please consult with a qualified investment advisor who is licensed by appropriate regulatory agencies in your legal jurisdiction before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments. The information on this site was obtained from sources which we believe to be reliable, but we do not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that while Wilson may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website they do not intend to disclose the extent of any current holdings or future transactions with respect to any particular security and, as such, you should consider this before investing in any security based upon statements and information contained in any report, post, comment or recommendation you read on the site.